All S&P 500 Companies But One Disclose Some Sustainability Activity

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A female technician performs a walking inspection through The Desert Water Agency fixed solar array in Palm Springs. Photograph by Mark Gamba/Gallery Stock

Bloomberg BNA -- Almost all of the top 500 publicly traded U.S. companies annually disclose information on their sustainability performance, but very few combine sustainability and financial performance data, according to a report released April 29 by the Investor Responsibility Research Center Institute (IRRCI) and the Sustainable Investments Institute (SI2).

All but one of the Standard & Poor's 500 companies made at least one sustainability-related disclosure in 2012, according to Integrated Financial and Sustainability Reporting in the United States.

The report looks at corporate sustainability reporting in the United States in 2012 in voluntary reports as well as Securities and Exchange Commission filings.

The banking company Zions Corp. is the only company that did not disclose any sustainability-related information in 2012, according to the report.

Only seven companies, or 1.4 percent, of the S&P 500 combined sustainability and financial reporting in a practice called integrated reporting in 2012, the report states. The seven companies that included a statement on integrated reporting in their 2012 reports are American Electric Power, Clorox, Dow Chemical, Eaton, Ingersoll Rand, Pfizer, and Southwest Airlines.

Of the companies studied, 74 percent placed a dollar figure on at least one sustainability-related initiative.

Environmental Management Top-Cited Issue

The study found that 68 percent of companies disclosed information about environmental management in their annual reports. These disclosures include money spent on environmental controls as well as cleanup and remediation costs from environmental spills.

Sixty-six percent of companies discussed climate change, which includes listing energy and fuel-efficiency efforts as well as investments in renewable energy and low-carbon technologies. Companies mentioned potential U.S. regulation on climate change and stakeholder concern about climate change in their reports, the study states.

A total of 63 percent of companies discussed hazardous waste, which includes toxic air emissions. Companies listed risks related to hazardous waste in their annual 10-K filings, and mentioned pending litigation, as well as risk mitigation efforts related to hazardous waste, the study says. Hazardous waste was the most common topic for which companies placed a dollar amount on their activities.

Thirty-nine percent of companies mentioned water use, the study states. Companies primarily viewed water as a cost or potential risk due to scarcity. Several companies with water-intensive manufacturing completed or started assessments in 2012 studying the current and future demand, availability, and risks of water use.

Less than half, or 43.4 percent, of companies linked executive compensation to some type of sustainability criteria, the study finds.

Anecdotal Evidence Provided

Many companies are providing anecdotal evidence of the links between sustainability and financial performance, but are not yet making financial estimates of their sustainability efforts, said Peter DeSimone, deputy director of Si2 and one of the report's authors.

Doing so will help companies and investors see how sustainability initiatives impact financial performance, he said.

The International Integrated Reporting Council and the Sustainability Accounting Standards Board are both currently developing methods for companies to disclose integrated sustainability and financial performance data.

About

Nations and companies face rising competition for strategic resources — energy, food, water, materials — and the technologies that make best use of them. That's sustainability. It's about the 21st-century race for wealth, health and long-term security, across the global grid.

Analyses or commentary in this blog are the views of the authors, and do not necessarily reflect the views of Bloomberg News.